President Donald Trump’s administration took its most drastic step yet to roll back the Affordable Care Act on Thursday evening, cutting off payments to health insurers for the cost-sharing reduction subsidy program to insurers just hours after issuing an executive order designed to draw people away from the health law’s coverage markets.
The moves — which critics call deliberate attempts to sabotage the law — come just weeks before the Nov. 1 start date of the individual major medical open enrollment period for 2018, when Americans will be able to start signing up for coverage for the coming year. They follow other steps the Trump administration has taken, such as slashing advertising and outreach budgets meant to get people to sign up, as well as planning outages of the website where people can enroll.
Late Thursday, the administration said it would immediately stop making the cost-sharing reduction subsidy payments. The payments — which are the subject of a legal dispute — go to health insurers in the Affordable Care Act to help lower-income people with co-pays, deductibles and other cost sharing. Without them, insurers have said they’ll dramatically raise premiums or pull out of the law’s state-based markets.
The White House said the U.S. Department of Justice and the U.S. Department of Health and Human Services both concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under the Affordable Care Act.
“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system,” the White House said in the statement.
The payments will stop immediately, with no transition period, Acting HHS Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma said in a statement. They next payments were due next week.
“Congress has not appropriated money for CSRs, and we will discontinue these payments immediately,” the department said.
The administrative actions come after Republicans in Congress tried and failed to repeal the law. Trump has repeatedly threatened to let the Affordable Care Act wither, but the most recent actions go beyond that, said Rep. Nancy Pelosi and Sen. Chuck Schumer, the top ranking Democrats in Congress.
“Instead of working to lower health costs for Americans, it seems President Trump will singlehandedly hike Americans’ health premiums. It is a spiteful act of vast, pointless sabotage,” the Democrats said in a statement.
House Speaker Paul Ryan backed the move.
“Obamacare has proven itself to be a fatally flawed law, and the House will continue to work with the Trump administration to provide the American people a better system,” Ryan said in a statement.
Premiums to Rise
Given the disagreements over the payments, and an ongoing lawsuit questioning their legality, many health insurers had dramatically raised the premiums they planned to charge for next year in anticipation of not getting the funds. The payments are made monthly, and have been estimated at $7 billion in total this year.
“Many, but not all, insurers assumed these payments would end and set 2018 premiums accordingly,” Larry Levitt, a senior vice president at the Kaiser Family Foundation, said by email. “Those that didn’t build this into their premiums may petition to adjust their rates or threaten to pull out of the marketplace. It seems like we’re in for a chaotic run up to the beginning of open enrollment.”
The moves are also a political risk for Trump and Republicans. An August poll by the Kaiser Family Foundation found that 78% of those surveyed thought the administration should try and make the law work, while only 17% wanted to see it pushed toward failure